The roots of the Brazilian IT industry can be traced back decades, though most of the rapid growth in the sector in Brazil occurred during the 1990s, following the introduction of the Real Plan in 1994, which rapidly stabilised the economy and brought inflation down to normal levels. As barriers to foreign competition were reduced or eliminated, Brazilian firms were forced to focus on core competencies to stay in the game, and as a result began to outsource software development of custom applications and other important IT functions. Hardware prices also dropped as import tariffs dropped, fueling even more demand for software.

The unique history of the Brazilian IT sector has generated a unique approach to the offshore outsourcing market, which we call Application LIfecycle Services. We believe Application Lifecycle Services to be the best approach to leverage Brazil¦s specific advantages as an offshoring destination.

Application Lifecycle Services consists of three distinct components - application development, application maintenance and legacy transformation. Many large companies in the US - as in Brazil - have custom computer applications that have been developed and perfected over time and are critical to the company¦s operations. But as important as they may be, the work of keeping these applications running smoothly often is not one of the company¦s core competencies, and may require a sizeable, dedicated IT staff. US companies can realize significant savings by sourcing this sort of maintenance offshore.

Legacy transformation refers to taking a custom application that was originally written in a language like COBOL to run n a mainframe environment, and updating it to run on a modern platform like Java or .NET. Legacy transformation can drastically reduce maintenance costs, and can also reduce or eliminate dependence on obsolete or more expensive mainframe hardware.

Brazilian IT services providers have substantial experience in many other areas of IT services for the Brazilian market, including higher-value-added services like custom application development. But application development usually requires substantial onshore resources to assess application requirements and perform the high-level design of the new application, and since personnel working onshore offset the offshore cost advantage, offshore application development makes the most sense for very large projects. Offshore application development, maintenance and legacy transformation can offer substantial savings for clients - and profits for service providers - on projects of virtually any size.

Brazil¦s favorable time zone represents another advantage in performing maintenance services for North American clients. As most of Brazil¦s major cities are only two time zones east of the US East Coast, normal working hours in both countries largely coincide. As a result it is much easier to provide real-time support for US clients from Brazil than from most other major offshoring destinations.

Thousands of US companies - including more than 400 of the Fortune 500 - already have operations in Brazil, and this helps to create an additional natural market for Brazilian IT services.